Bitcoin price swings on shifting Fed expectations ahead of CPI, FOMC

Fundamental View

Last week ended on a volatile note for bitcoin. The cryptocurrency jumped on Thursday following dovish comments from Fed's Waller. Because he departed from his typical hawkish stance, markets repriced rate expectations, reducing the likelihood of a September rate hike.

Friday saw bitcoin give back most of those gains after the US NFP report revealed August job growth nearly three times the 56K consensus. That sparked a hawkish repricing, pushing the odds of a September rate hike back to where they were before Waller spoke.

All attention this week is on US CPI data. Barring a surprising development in US-Iran ties, bitcoin's price is expected to stay largely rangebound or slightly negative, with traders possibly beginning to hedge ahead of the CPI release.

A CPI reading that is soft or as expected is likely to lift bitcoin, given Waller's statement that he would only consider a rate hike with a hot CPI. On the other hand, a higher-than-expected core monthly inflation figure could prompt another selloff via a hawkish repricing.

Daily Timeframe Technical Analysis

Bitcoin rose to the key 82,500 resistance following Waller's dovish remarks. Sellers entered at that level, using a defined risk above resistance to bet on a decline toward 76,000 support. Buyers are looking for the price to return to support for a potential rally to 98,000, or for a breakout above 82,500.

4-Hour Timeframe Technical Analysis

A downward trendline on the 4-hour chart marks the bearish momentum from the strong NFP data as Waller-driven gains faded. If the price retests this trendline, sellers are expected to use it with a defined risk above to continue driving toward support. Buyers, in contrast, want a break above the trendline to build long positions for a rally to resistance and a potential breakout.

1-Hour Timeframe Technical Analysis

A second, steeper downward trendline on the 1-hour chart may serve as resistance. Sellers could split their shorts to use both trendlines to aim for new lows. Buyers will watch for breaks above these trendlines to build long positions targeting 82,500 resistance.

Upcoming Catalysts

Thursday brings the US PPI report and weekly jobless claims. Friday ends the week with the US CPI data.